North American Palladium Ltd. (TSX:PDL, NYSE MKT:PAL) announced that it has filed a prefeasibility study on Phase I of the offset zone of its LDI property.
As quoted in the press release:
- Initial Offset Zone reserves total 7.7 million tonnes, representing approximately 1.1 million contained palladium ounces.
- Management estimates that at current metal prices (US$750 palladium price), the economic analysis shows $226 million in undiscounted post-tax cash flow (determined as net revenue less operating and capital costs) for the initial Offset Zone reserves, a 95% internal rate of return (“IRR”) (over a 27-month payback period), and a net present value (“NPV”) of $187 million at a 5% discount rate.
- The Prefeasibility Study economic analysis was only applied to the converted reserves (representing approximately one third of the entire Offset Zone deposit in the measured and indicated category), however much of the infrastructure spend associated with those reserves is expected to also be utilized for the additional mining phases in the future.
- $79 million capital investment in 2013 to complete Phase I of the LDI mine expansion, which is expected to allow the Company to transition operations to shaft production in the third quarter of 2013, which is expected to allow the Company to increase underground mining at a reduced cash cost per ounce.
- There is significant upside potential from continued exploration at the LDI property, where a number of surface and underground targets have been identified near existing infrastructure, highlighting the potential for future resource expansion at LDI.
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